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Global Retailers – 3 Major Missteps to Avoid When Going Global

By The Grin Labs

We at the GRIN have seen one retailer after another make three major missteps when they start the process of going global. These mistakes may not seem so terrible, but if you’re a retailer and contemplating any of these three, you’ll either run a global business into the ground or get fired before you have the chance to. Or, if you’re really good, you’ll get hired away to a competitor because you’ve made all of the mistakes they’re about to!

Misstep One: Write your 5 year global business plan

So many global retailers start out on the wrong path by putting together a lengthy, 5-year global business plan outlining financial projections in great detail, month by month, country by country. They model assumptions on existing domestic business, and often plan to use the same vendors in every region around the globe. The C-level team loves the projected ROI, and uses the plan to fund the global effort. As an added ‘oops,’ retailers throw in countries like China or Brazil because they’re on everyone’s list of where to expand… right?

The right way to go: Leading retailers don’t work with these encyclopedic business plans. They understand that working off of iterative business models with a start up culture is the only way of developing business in other countries. Leaders in retail use words like “pivot” and “iterate,” and they work off of a business model canvas (like a lean startup) regardless of how big or established they are.

Misstep Two: Pick the countries you want to do business in based on… well, things.

This one is all too common. The global-minded retailer will take a look at the company’s customer heat map, and plan on going wherever they are getting the most traction. Maybe the company’s CEO has heard a lot about the BRIC, and wants to play in emerging markets. Maybe a report on gizmos in Argentina has everyone in the company concentrating on expanding there. Big mistake.

The right way to go: There are reasons to go to certain regions, but those reasons can’t be “it’s what everyone else is doing.” Leading retailers evaluate countries based on their ability to acquire and grow business in the country, the ease of dealing with money concerns, and their ability to meet customer expectations around delivery among other criteria.

Misstep Three: Hire the vendors you know

You think you know the best vendors. Maybe you are clicked into the major guys who you see at all of the global conferences. You might think it’s best to go with those massive global vendors you’ve worked with before for your domestic business and focus hard on negotiating aggressive pricing. Nobody ever got fired for hiring IBM and getting a good deal, right?

The right way to go: Leading retailers hire people and vendors that have in-depth local knowledge and that have worked with other retailers to help them lead in their target countries. It is worth noting some of the great companies are huge global enterprises and others are smaller local players – size doesn’t necessarily matter, because local knowledge and success trumps all.

So what should be done?

What are the secrets of developing the right plan, people and approach? What are the leaders doing?

We at the GRIN have met with hundreds of retailers over the last several years. Every single leader we’ve worked with does two indispensable things.

They have a process around localization

They have a culture of open collaboration and innovation.

These two qualities help them develop ways of working that set themselves apart from those laggards that make these 3 major missteps.

The Takeaway

Ultimately, the big unspoken error of global commerce is that every one of us thinks we understand other cultures. If I live in the US, I may think I understand what it takes to be successful in Canada, the UK, and Australia. If I live in Singapore, I may think I know how to be successful in Indonesia, Thailand, and Malaysia. If I live in China, I may think I’ll have no trouble bringing my business to Hong Kong. The list goes on. The reality is – we don’t understand. Even well-traveled international folks don’t have the kind of on-the-ground insight that it takes to really understand a local market.

Global commerce represents a massive opportunity in our industry and the leaders are pulling away, setting customer expectations and an almost unreasonable height. It is key that we learn from them, and develop our business as leaders – not laggards.